May 22, 2019; Generocity
Often, the public procurement process from city governments is tedious and time-intensive for nonprofits that use local opportunities to bolster programming and meet local needs in their communities. Increasingly, nonprofits face growing competition from their for-profit counterparts, which can often deliver services at a lower cost or offer higher financial returns to cities, given their capacity and ability to raise investment capital as business entities. This leaves the social infrastructure in communities at a competitive disadvantage and requires a more thoughtful approach to determining the value of contract bids beyond simply financial criteria.
Luckily, some cities are exploring open government principles and embracing transparency in the procurement process. In Philadelphia, two nonprofits are partnering with the city of Philadelphia to implement procurement reforms to ensure food quality is prioritized while considering inclusive input. Given that many nonprofits participate in and respond to procurement RFPs from local governments, understanding open contracting can benefit nonprofits looking to add value and legitimacy to their bids while at the same time embracing democratic principles that level the playing field.
Open contracting is the process by which cities and local governments integrate feedback and input for multiple stakeholders into the procurement process, as well as transparency. Open contracting “is about publishing and using open, accessible and timely information on government contracting to engage citizens and businesses in identifying and fixing problems.” Transparency is key, as contracting globally accounts for nearly $9.5 trillion, which represents 15 percent of the global GDP. At the US federal level, initiatives such as Data Lab seek to help the public monitor and understand the flow of $500 billion annually through contracts to companies, with the goal of increasing the public’s understanding of government finance.
While transparency at federal levels can be difficult to institute through policy, local levels have seen progress. In Philadelphia, for example, the city government is using open contracting to improve the procurement process related to the food services it funds. In part driven by a recent voter-approved initiative on best value procurement, the exploration of open contracting for food services also aims to balance real human needs for people who access food programs funded by the city with responsible stewardship of public resources.
Working with the city of Philadelphia are two nonprofits: the Sunlight Foundation, a national, nonpartisan organization that uses civic technologies, open data, policy analysis, and journalism to make government and politics more accountable and transparent; and Open Contracting Partnership (OCP), which works across sectors and along the whole process of government contracting to use the power of open data to save governments money and time, deliver better goods and services for citizens, prevent corruption, and create a better business environment. Together, these nonprofits and the city of Philadelphia engaged stakeholders involved in the delivery of city funded food services. Through interviews, they uncovered short- and long-term strategies to address issues identified by residents.
Though these revisions will influence the procurement process locally in Philadelphia, in other areas, some nonprofits face increased competition and a lack of open procurement principles, which has led some to experience dramatic losses of income. As NPQ reported in March, DC Central Kitchen, a nonprofit social enterprise that runs a reentry program that trains returning citizens in culinary careers, lost a contract bid through a procurement process in Washington DC. In part because they did not have a certification as a certified business enterprise, it lost contracts accounting for 500,000 meals annually to the city’s largest shelters, valued at nearly $800,000.
Similarly, in January, NPQ ran a story about a nonprofit in Modesto, CA losing a contract to a for-profit company, Creative Outdoor Advertising of America, based in Florida. The contract sustained the United Cerebral Palsy of Stanislaus County’s bench program, which paid the city to sell advertising on city benches and buses as an avenue for providing adults with disabilities jobs. Through the maintenance and repair of benches, program participants gained wages and job experiences. Losing the contract means that that about two dozen disabled adults lost their jobs, and the opportunity was replaced by a company seeking to profit off of the innovative workforce development initiative
Ultimately, including nonprofits in developing open contracting processes is one way for cities to better understand the unique and multidimensional value that nonprofits offer their communities. This value includes but also transcends simple bottom-line financial criteria. As cities across the country look for more dynamic civic engagement strategies as ways to make them more connected and responsive to resident needs, including nonprofits in the landscape of participants with key insights and input is paramount. As this example from Philadelphia unfolds, it offers some insights and lessons to nonprofits about the benefits and processes involved in open contracting and revising procurement processes to include more transparent and relevant features.—Derrick Rhayn